21 of 21 people found the following review helpful
5.0 out of 5 stars The lunatics are in control
For me it was the crash of ’86. For others it will be the Great Recession. Whenever economic calamity strikes we reach for a textbook to gain an understanding of what just happened, why, and what can be done about it. Three decades down from the awakening of my own curiosity I find there are more questions than answers, and they’re multiplying all the time...
Published 10 months ago by therealus
1 of 16 people found the following review helpful
Published 9 months ago by Mr V Fairhurst
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21 of 21 people found the following review helpful
5.0 out of 5 stars The lunatics are in control,
For me it was the crash of ’86. For others it will be the Great Recession. Whenever economic calamity strikes we reach for a textbook to gain an understanding of what just happened, why, and what can be done about it. Three decades down from the awakening of my own curiosity I find there are more questions than answers, and they’re multiplying all the time. One of the virtues of Ha-Joon Chang’s introduction to Economics is that, unlike many of the books and courses I’ve devoured over the years, it makes clear that there is no silver bullet. Some of the people claiming to have the answers are as clueless as the rest of us, and that applies in spades for the uncritical cheerleaders of the neo-liberal consensus who laid the foundations for the current debacle, a process some have traced to 1979 and the election of Thatcher and, in short order, the 1980 election of Reagan.
In fact, one of Chang’s bugbears is the laughable concept of the “trickle-down” effect, made “popular” in the Reagan era, where we put even more money in the hands of the rich in the vain hope that they’ll invest it in something that will eventually provide the rest of us with a job and prosperity. Ha! How’s that one working out for ya? Well, looks like most of the people with the money are still investing in the kinds of complex derivatives that got us here in the first place, not in the capital equipment and R&D that would actually be useful.
Much of the content of the book deals with fairly basic economic concepts, clearly positioning it as a primer, but for those wishing to know more the Further Reading sections at the end of each chapter are excellent, referencing some of the books I had in mind when reading. Throughout the text new concepts are printed in bold so they’re easy to find if that’s what you need to do. Chang’s aim is, as I interpret it, to democratise economics, and in that he succeeds reasonably well, arming non-economists with sufficient insight to build an informed opinion and begin to challenge the views of the professionals.
One of the more useful things for me was the chapter explaining the different schools of economics, and who fits into which. One of my surprises in this was his placing of Paul Krugman in the neoclassical school, when I expected to find him in the Keynesian. However, Chang makes a good point about the essential conservatism of some of Krugman’s thinking, especially when it comes to his views of low-wage factory jobs in the developing world.
I do however feel he emphasises the wrong aspect of Schumpeterian thought, the atrophy of capitalism, and doesn’t make enough of the concept of “creative destruction” (it’s not even in the index). But at least it’s in the text, which is more than can be said for inflation, NAIRU and the Philips Curve, a shame given his treatment of unemployment, the other side of these concepts, is so good. He also misses some very straightforward opportunities to introduce the ideas of agency theory, moral hazard and adverse selection (though he does manage principal-agent problem), and the paradox of thrift. Perhaps he was trying to avoid overloading with jargon, and it’s partly true that economists (and other specialists, for that matter) use jargon to obscure rather than clarify, but it’s at least equally true that the use of specialist language can both shorten a conversation and give it focus.
Chang’s use of language is generally straightforward, with clear explanations of the ideas with which he deals. Sometimes he makes reference to popular culture in order to make his point, and this works better in some cases, as in the reference to Gordon Gekko in Wall Street, than others, as when he tells us not only that the Hoover Dam appears in a Superman movie but also that the movie stars Christopher Reeve. And much as I like the idea of an explanation of positional goods channelled through Sheldon Cooper of The Big Bang Theory, it becomes overlong when accompanied by a psych evaluation of the character and a rundown of the programme’s dramatis personae. At times like this, attempts to brighten up your subject look too much like an uncle dance in an Ibiza nightclub.
Having said all which, he’s right an awful lot more than he’s wrong. Overreliance on a single set of theories and models renders you blinkered; adopting a pluralist approach may not guarantee a correct analysis but may at least make it less wrong. Recent economic thought has concentrated too much on the market at the expense of non-market aspects of the world. Some things – free trade, comparative advantage, foreign direct investment – look great on paper and in static models, but the moment they are injected with a whiff of reality their elegant simplicity looks like starry eyed, rose-tinted idealism or, worse, cynically disingenuous. Apparently “scientific” measures such as the Gini coefficient and GDP, without proper understanding of their underlying strengths and weaknesses, are limited in their ability to tell us anything useful (although maybe it’s a case of their being the worst measures available except for all the others?). And, ultimately, that economics is political, driven by the personal agendas of economists themselves and the people and institutions that finance their work.
So back to the beginning. Will it help with an understanding of what went wrong in 2008?
Chang very carefully explains what the different types of banks do and are allowed to do. How some of them thought it would be a good idea to take a chance loaning people with poor credit ratings and little or no income enough money to buy themselves a house and bundle up the resultant debts into securities and sell these to other institutions to diversify the risk. How this was supposed to diversify away systemic risk, based on the assessment of some very clever mathematical modelling. And how the securities were ultimately so complicated that the associated contracts ran to hundreds of pages that virtually nobody had the time to read. Admittedly what he doesn’t tell us is what Nate Silver and Felix Martin, amongst others, have told us about the models’ being based on a limited dataset derived mostly from years when economies were booming, but by now most of us have got the idea that the problem was that the lunatics had taken control of the asylum. Read it and weep.
57 of 58 people found the following review helpful
5.0 out of 5 stars Too Important To Be Left To Economists,
Ha-joon Changs "Economics: The User's Guide" is the first title in the newly resurrected Pelican imprint. Chang himself is best described as a heterodox economist, firmly outside the mainstream where neoclassical economics (not to mention neoliberalism) is the reigning creed. But given the multiple failings of orthodox economics the heterodox Chang with his cheerful style, wide learning and a clear and concise authorial voice make him the ideal candidate for writing an introductory book on economics. He doesn't dissapoint.
The book itself is divided into twelve chapters exploring a range of economic issues including asking what exactly economics is, exploring the role of the state, inequality and poverty, work and unemployment, finance and production. Sixty odd pages are devoted a brief history of capitalism, giving the reader a pretty good understanding of two and a half centuries of capitalisms global progress.
It's a brilliant introduction for those who have encountered the economy watching the news, through history or political books, and want to find out what this vitaly important aspect of our lives is about. The further reading guides at the end of each chapter are a valuable resource for those whose interests have been aroused. More seasoned students of economics should find the scope of the book (both intellectually and geographically), and it's easy and succinct style ample reward for the effort spent reading. One quibble I have: important terms (privitisation, capital controls, etc) are printed in bold at the point in the text where they are explained, but the index of the defined terms that ought to be there, allowing easy reference to the definitions, is absent.
This is a book which along with his 23 Things They Don't Tell You About Capitalism and Bad Samaritans I'd strongly recommend reading, not least because (as Chang himself notes) a widespread knowledge of economics is essential to understanding our societies and democraticising our political life.
35 of 36 people found the following review helpful
4.0 out of 5 stars Neither dismal nor a science,
Economics, as you have probably heard it said, is the dismal science. It has also been said that string ten economists together and you will never get a conclusion (or words to that effect).
This book is not dismal. And it does not reach definite conclusions (by and large) but is no less worth reading because of that. Ha-Joon Chang has written an introductory text to the subject which goes beyond providing dictionary definitions of key terms. He provides a potted history of the global economy, the consequences of growing inequality in rich countries, an excellent, succinct account of what went wrong with the banking system in 2007/08, expresses scepticism about the value of `happiness' economics (welcome, in my view) and much else besides. You will read a lot of interesting ideas - why, for instance, manufacturing has not declined as much as we think in some western countries, why globalisation is not an inevitable expression of technological progress, why most of the poorest people in the world do not live in low-income countries and, topically, why Google and Starbucks (or Amazon!) have not actually broken any UK laws in their various tax-dodging schemes. It is also a very well-written, very readable work, a pleasure to read. You will certainly learn a lot if you read it.
The principal merit of this book is two-fold: it reminds us that economics is not a science. You cannot take politics out of economics. Dismal it may be; a science it is not. Economists articulate value systems as much as they do descriptions of what is supposed to be happening in the world. The second is that, despite the impression you may get from reading the mainstream press, there are and have been numerous schools of economic thought. The `neo-liberal paradigm' to use that fancy phrase, is the dominant one but it cannot claim a monopoly of truth (it's wrong about a lot of things, as the financial crisis 2008 showed). This book will give you a good sampling of the various ways economists have tried to make sense of a complex, refractory world. He even gives some credit to the insights of other schools of thought - such as the Austrian school - with which he is otherwise out of sympathy.
Chang tells us that he wrote this book to tell us how to think, not what to think. To an extent, he succeeds. I say `to an extent' because his own values and biases come out quite clearly in places (the usual misquote from Thatcher that there is `no such thing as society' inevitably pops up here). He has plenty of fun shooting fish in the barrel with the manifest failures of the banking system (and the failure of mainstream economists, by and large, to predict the 2008 disaster) but exaggerates the extent to which neo-liberal economics was merely a push to dominance by the rich and powerful: the neo-liberals' rise in the 1980s was in part down to the failures of dominant Keynesian paradigm to deliver growth in the real world. Professor Chang writes from the wilderness (albeit in comfortable circumstances at an elite British university) but fifty years ago, he would have been mainstream, and people like Von Hayek and Friedman would have been the Cassandras. That the roles were reversed was, in part, down to the fact that plenty of ordinary people (like my father, a working-class Tory) were prepared to give people like Thatcher and Reagan the benefit of the doubt in 1979 and in 1980.
Overall then, a very good introduction to economics, written from an unorthodox point of view, and I enjoyed reading it. It was great brain food. However, do take Chang's own advice: don't just buy this one introduction and take everything he says as gospel truth. Go out and find complementary or opposing perspectives from other writers to try and understand more about the complex nature of the world in which we live. Professor Chang, if by some happy chance you have taken the time to read this review, I want to let you know that you that I am going to do what you suggest
7 of 7 people found the following review helpful
4.0 out of 5 stars It's Political Economy, not Economics,
A guide in two parts. The first describes and discussed theories of economics, enumerating 9 of them, with their good and "bad" points. The point is very clearly made that there is no over-arching theory of economics, rather we have to use whichever one seems to best fit the situation, so that economics isn't as clear-cut a "science" as physics. (Though the author misses the chance to point out that physicists think of light as being both particles and a wave form, depending on what's happening.)
Science usually goes from observations to a theory, and from there to constructions based on the theory that can be tested; these may tend to confirm or refute the theory. By contrast, economics seems to the outsider to be based on pure theory, more akin to thinking how things ought to be rather than how they actually are. If Chang explains why this isn't the case, then I missed it. And the outside thinks that ideas like "perfect" competition, markets etc, seem to be a gross oversimplication.
The second part is rather different; it's not so much about "economics" as "political economy", and the point is well made that economics cannot be seen as something pure and unsullied, rather it is always connected to politics. There are some discussions about the blunt application of theory and the disastrous consequences that have occurred by blind adherence to a particular theory.
I'd have found it useful if the 9 theories had each been applied to a few scenarios, either real or imagined, to see what the outcomes could have been otherwise.
The messages are: it's really "political economy", and that no single theory is adequate to explain everything. But quite how to choose the most appropriate one for the particular circumstance remains out of my grasp.
1 of 1 people found the following review helpful
5.0 out of 5 stars Citizen's Economics - a great first read and reference!,
Citizen's Economics - a great first read and reference!
Chang's introduction to economics for active citizens is a just what is needed in a not too overcrowded field of popular presentations of the "discipline". It is for the most part easy to read, well partitioned, and comprehensive and many times every so spot on in its judgements. Partly it reads as an expanded glossary of economic terms in a more sophisticated economically theoretical and empirical context, which is all to the good! Suggested improvements might be indexing all the bold-faced words in the text and revising the Further Readings to include a wider variety of the literature on popular economics.
Supplementary/complementary or alternative popular introductions of varing interest might include:
1. Economics Explained by R. Heilbroner & L, Thurow
2. The Instant Economist by T. Taylor
3. What You Need to Know about Economics by G. Buckley & S. Desai
4. Free Lunch by David Smith
5. The Little Book of Economics by Greg Ip
6. Naked Economics by Charles Wheelan
7. Basic Economics by T.Sowell
Good readable histories of economics include:
1. The Worldly Philosophers by R. Heilbroner
2. A History of Economics by J.K. Galbraith
Up-to-date Critiques and Alternatives to orthodox economics include:
1. Debunking Economics, 2nd ed by S. Keen
2. Deductive Irrationality ed. by S. McCarthy & D. Kehl
3. Zombie Economics by J. Quiggin
19 of 22 people found the following review helpful
5.0 out of 5 stars A Gombrich for Economics - and Politics,
As someone who's been interested in politics since I was a teenager, I've long tried to get my head round economics, feeling that understanding politics requires understanding the other.
This theme is actually one that runs through the whole book, framed from the other perspective: that 'completely free markets' and so on are a nonsense. They only exist in the context of the laws that define them, which are most emphatically *not* fixed, since they have changed over time. Chang thus asserts that economics doesn't exist without some set of moral and political values behind it, and argues that the subject's original name, "political economy" is well worth resurrecting.
My first attempts to understand the subject were thwarted by finding books that were only dry or unconvincing. Since the 2007 crash, along with many others, I have read avidly from some of the outpouring of new books on finance. Although I was familiar with some of the material, this is the book I wish I'd read first many years ago. Like Gombrich's Story of Art, a book that you could give to a bright and curious teenager that would provide them with an excellent all-round background in something of immense importance in understanding the world.
Since I'm of the left myself, I have long admired the gentle humanity and wry humour of Professor Chang's economic writings in the Guardian, and it is a relief to find that there are economists who can contest the free-market doctrines of the right with reasoned arguments backed with hard evidence from history and from present data. Chang is keen throughout the book to give you the numbers to give a feeling of perspective to the discussion, but also keen to point out how vague, ill-defined and poorly-calculated many economic metrics are.
I suppose a criticism for some might be he allows his opinions of the various arguments to intrude a little too much into the text articulating them. But given that his central themes are that (a) Value judgments underpin all economic arguments, and (b) modern economics has been far too monotheistic and we gain most by drawing on the work of all the different schools of thought, I feel he gives the "right-wing" schools fair coverage.
1 of 1 people found the following review helpful
5.0 out of 5 stars I just loved this book,
I just loved this book. I think the basic message of this book is we need a heterogenous methodology to master economy. Many people think economics is about one THEORY (e.g. the neoclassical theory based on rational actor) which handles all problems. Economics has been even seen as the "theory about everything" and even the only theory about everything.
Accrding to the book there exists many schools besides the Neoclassical - like the Behaviorist, Schumpeterian, Austrian and Keynesian, who give tools to master Economics. I agree.
For a European Conservative like me the book first sounded maybe slightly too left-wing. But the book does not want to give you ready answers on everything but it wants to learn you think about economics.
5.0 out of 5 stars An Excellent Economics Primer,
I brought this book as I was interested in learning something about economics as a lay reader. I was fortunate that at the time I was looking for an economics primer Pelican released their "Introductions" series. I guessed that Pelican were an offshoot of Penguin and so I felt quite confident that this might be a good primer. I have had mixed experiences with the Very Short Introductions published by OUP and when I compared this primer with the Very Short Introduction I saw that this book was about three times longer and a similar price. Based on a hunch that trying to compress information tends to result in compromises and omissions I decided to try out this Pelican Introduction. It was an excellent choice.
This book is split into two halves, the first is all the introductory stuff, general ideas, what the focus of economics should be, a history of economics and a survey of various schools of economics. The second half is about application of economics. At this point the book becomes more dull because the facts and figures start creeping in, but this is to serve two purposes, one, to give some meaning to the numbers commonly disused in economics, and two, to build a political (and to a lesser degree a moral) argument (or at least a viewpoint). The key point being made is economics as Chang sees it is not an isolated subject, but in fact is a branch of politics and that the old name for economics (political economy) is a more true to life name for what economics is. This certainly would seem true if you believe that Chancellor of the Exchequer has any influence on the economy (something we all seem to take for granted). That said I can also entertain the point if view at the more theoretical end of economics more conceptually pure mathematical ideas may rule.
In terms of a political view Chang certainly seems left wing in his attitude, however I don't think this should be seen as a criticism of this book or indeed true of his political view. An introduction that blindly follows orthodoxy is always going to be limited in its ability to inspire thought or passion or interest in a reader. Chang is good at challenging the assumptions that seem commonplace when the economy is discussed in the media such as the supreme value placed on free trade or the relevance of "the market" to our lives and our economy. The brief history of economics section is very good at challenging these assumptions. I am not sure I want to endorse all of Chang's opinions, but they do make an effective foil to explore the received wisdom of the neo-classical economics that seems so prevent in political thinking and this is what makes for such an engaging and worthwhile read. Whether or not these are the true opinions of the author is almost irrelevant in this respect.
One last point to make is that this book is recent enough to make references to other well known and popular economics books like The Sprit Level, The Price of Inequality or Freakonomics, putting them into some context, and this made me feel confident to read these other books and not be so easily impressed by their arguments, but confident to consider their merits.
2 of 2 people found the following review helpful
4.0 out of 5 stars Absolutely the best economics book I've read,
This review is from: Economics: The User's Guide: A Pelican Introduction (Pelican Books) (Kindle Edition)
Absolutely the best economics book I've read. Easy to read, full of interesting illustrative detail and offers some insight into how and why mainstream economics got to be the way it is.
5 of 6 people found the following review helpful
4.0 out of 5 stars A great little book - an alternative view,
As introductions go, this is a great little book. Covering a wide and potentially difficult to understand, verging on the boring subject, Chang manages to convey an interest and understanding to the lay reader or budding economist.
Taken through the history of economics and building on social and political dimensions I was particularly impressed by the juxtapositions he presents with regard to the differing schools of economic theory.
Each school is developed in accessible, bit-sized and very readable sections incorporating a comprehensive bibliography, as well as numerous and helpful end notes, allowing the reader to investigate in greater depth any particular field of interest.
Serious economists might find the jaunty, light hearted and very unconventional poke at the subject off-putting, but this just adds to the enjoyment of the read.
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Economics: The User's Guide: A Pelican Introduction (Pelican Books) by Ha-Joon Chang